Introduction
In a modern world, the office of the company secretary has no one meaning and covers a multitude of tasks and responsibilities.
The Company Secretary, regardless of the latter term, cannot be associated with a “secretary” in its common sense. There is often a misconception that the role of the company secretary is purely administrative, drafting and distributing sets of documents for the Board meetings with only passive participation, taking notes of the proceedings of the meeting, and thereafter preparing minutes. Nowadays, however, this is probably the smallest part of what the company secretary does.
Instead of purely clerical duties, the Office of the Company Secretary is of a crucial – and still increasing – significance for effective corporate governance and must be rather described as the company’s administrative officer empowered to exercise specific functions and responsibilities under Maltese law.
This article aims to introduce the role of the Company Secretary with its significance and the desired candidate’s profile for this position. In the upcoming second part (II) will be further discussed the competences and daily duties of the Company Secretary’s office.
In 1996, for the first time in Maltese law, The Companies Act imposed an obligation for every company, whether public or private, to appoint a company secretary. Under Article 138 Section (3) thereof: It shall be the duty of directors of the company to take all reasonable steps to ensure that the company secretary is an individual who appears to them to have the requisite knowledge and experience to discharge the functions of company secretary.
The abovementioned requirement meant stricter and more extensive filing obligations for the existing and newly incorporated companies. This resulted also in a long list of duties imposed on the company secretary backed by penalties in case of every single breach thereof. At the same time, there is a constant emphasis to ensure a high level of professionalism in the provision of company secretarial services.
The Profile.
The Companies Act does not require a company secretary to have any academic or professional qualification. Having said that, it is hard to imagine the subscribers to the memorandum and articles of association – in case of the first company secretary’s appointment – and the Directors in all other cases – would have chosen a random person for this position. Beyond doubt, the proposed individual must have a sufficient understanding of the principals of company law and administration.
In particular, the candidate should comprehend the nature and contents of the memorandum and articles of association of the company, of the division of powers between the general meeting and the board of directors, of the notion of shares and share transfers, of the various types of meetings and resolutions and of the role of the chairman, the managing directors, executive directors, and other personnel within the company. Most importantly he must certainly be proficient in the various duties incumbent upon the role under the Companies Act.
From the practical point of view, the company secretary must also understand of how the companies operate and are managed. This relates directly to a personal professional experience which should be adequate to the scale of the company’s activity.
The Companies Act, in addition, sets out few disqualifications regarding taking up and holding office of a company secretary (…) A person shall not be qualified for appointment to hold office as director of a company or company secretary if:
(a) He is interdicted or incapacitated or is an undischarged bankrupt;
(b) He has been convicted of any of the crimes affecting public trust or of theft or of fraud or of knowingly receiving property obtained by theft or fraud;
(c) He is a minor who has not been emancipated for trade;
or
(d) He is subject to a disqualification order (…)”
The Companies Act stipulates that a sole director cannot hold the position of company secretary within the same entity, however, there is an exception. If the company is an exempt company, then the sole director would be entitled to hold office as company secretary accordingly.
It is also worth noting that more than one company secretary may be appointed under the Companies Act. This solution, however, proves useful only exceptionally. Whenever there is more than one person holding office of the company secretary, each of the officers will be liable independently, notwithstanding the allocation of duties made by the Directors internally.
To be continued.
Disclaimer: The above-mentioned article is simply based on independent research carried out by Dr. Werner and Partner and cannot constitute any form of legal advice. If you would like to meet up with any of our representatives to seek further information, please contact us for an appointment.
